The cost of cocoa has skyrocketed in recent months, but not for the reasons you might expect. While this increase is not necessarily reflected on grocery store shelves just yet, consumers will soon be buying their favorite chocolate products at a steeper price. Beneath the surface, this problem is (unsurprisingly) tied to climate change and equity for farmers.
To get a closer look at this issue and what it means for chocolate lovers everywhere, I sat down with Tim McCollum, founder and CEO of Beyond Good, a chocolate company working to change the way cocoa is produced at the source.
Could you share a bit about your company and its business model?
We produce chocolate and vanilla in Madagascar. We’re vertically integrated so we manufacture chocolate on the ground right next to the cocoa farms. We have about 100 employees, we work with about 100 cocoa farmers, and everything’s 100% traceable. It’s a very unique business model within the chocolate industry.
What would you say is the main cause of the recent spike in the price of cocoa?
It’s very hard to say, but there’s a couple different things contributing to it. If you look at the price, historically it’s been around $2,500 to $3,000 per ton, and now we’re up to $12,000. So that’s a 4x increase. And what we know hasn’t been driving it is–there hasn’t been a 400% increase in consumer demand for chocolate. So there are other factors that don’t have to do with demand, and that would be the supply side. If you look at West Africa, that’s like 50-60% of the world’s cocoa. In particular Ghana and Ivory Coast, they’ve had one or two years in a row of 20% reduction in crop output. There’s less cocoa being grown. So what’s at the root of the lower crop? It is in part climate, in part disease, and probably in part farmer incentives and motivation.
I would also imagine disease is exacerbated by climate impacts.
Probably. A lot of these things are all interconnected.
What changes have you seen in the industry since the price increase?
There’s a tremendous amount of chatter and noise and people talking about increasing price. We’ll probably start to see increased prices reflected for consumers in October or November. A lot of people are rushing to get supplies to make sure they have enough cocoa–that’s probably going to drive the price up a bit as well. I haven’t seen much action in terms of how to prevent this or how to fix the problem.
How does this affect cocoa farmers on the ground?
The majority of the cocoa, again, is West Africa. I can’t really speak to that because I don’t have direct knowledge of that supply chain. In Madagascar, which is tied to the global market but a bit different, farmers are getting a lot more money. And that’s a good thing. That’s not the case in West Africa–that’s the main difference.
Could you speak a bit more to the reforestation work that Beyond Good is doing with the cocoa crop?
I’ll give a bit of a contrast with what typically happens in West Africa. Historically when the cocoa crop increases, there’s usually a mass migration. You have a lot of people moving somewhere to plant cocoa, and there’s a lot of deforestation. Even if it’s a government-protected national park or forest, that gets logged and then exported as timber, so the government collects money on that, and then it gets planted with cocoa. So cocoa can actually be a driver of deforestation. You lose the biodiversity and tree cover, and that gets replaced with a monocrop. No agroforestry, no intercropping, and also a fair amount of herbicides and pesticides into the soil.
What we’ve seen in Madagascar is pretty much the opposite. The country was actually deforested a couple hundred years ago for grassland, for cattle, to plant rice–subsistence agriculture–but deforested nonetheless. That land has been slowly reforested with cocoa, and with it, a three tiered canopy rainforest. So you have the upper-most level tree cover, a mid level, and at the bottom is cocoa. Cocoa in Madagascar needs about 50-60% shade, so that’s why you’re forced to put your canopy above it. In West Africa where it’s commodity cocoa and they don’t need the tree cover, so it’s kind of doubly bad for the environment. You’re not getting the biodiversity into the soil, you’re not getting biodiversity in terms of intercropping, and you’re getting a lot more fertilizer into the soil.
Why do they not need that canopy in West Africa? Are they growing different types of cocoa?
That’s part of it. Part of it is if you’re a farmer and you have a super small parcel of land, say one acre, it’s very hard to plant anything other than cocoa because you’re not getting an income from it. And it is a hybridized commodity cocoa that doesn’t require shade. It requires a lot of fertilizer, but doesn’t require as much shade. And then in Madagascar, and in a couple of other countries around the world, you have more of an heirloom cocoa that’s richer and has more flavor. The type of cocoa that produces a better chocolate bar actually requires more shade, so it’s better for the environment too.
How do you see this playing out moving forward?
It’s hard to say. I think most people are going to come to the realization that there are some market fundamentals that aren’t right. What needs to happen for this to be sustainable is the price needs to come back down. Because where it is now is not sustainable for anyone, and most of the farmers aren’t actually getting more pay. Farmers need to make more for this to be really sustainable. Part of what’s driving the low crop is probably farmer motivation and incentives. If you’re living in poverty and you’re making $2 per KG, it’s just not enough to get excited about farming cocoa, so people aren’t farming cocoa. One of the ways to fix that is to make sure cocoa farmers are paid more. And hopefully at the end when this all settles, the price comes back down, but not all the way to the point where it’s not sustainable for the farmer. Right now it’s not sustainable for chocolate companies, but you have to find a nice middle ground where the farmer gets paid enough.
What do you see as viable short and long term solutions to this problem?
It’s such a big industry and the problems are so big that anything short term, I think by nature, isn’t going to fix it. But I’ll start with the consumer and people who eat chocolate.
If people eat a little less chocolate, but they eat darker chocolate–so more cocoa, higher quality, less milk chocolate, less sugar, and they pay a little bit more for it–that’s what a sustainable chocolate industry looks like. That’s how you start with the consumer, because that’s what drives more industries: who’s buying the product, and how are they buying it? If those things happen I think the industry’s gonna be fine.
On the supply chain side, what that would do is incentivize farmers to farm with a higher price for cocoa if you’re willing to pay more. That, at the end of the day, is the only fix. Farmers have to make more money.
It’s an interesting point. I think there’s a misconception that cocoa farming as a whole is bad for the environment, when in reality it’s no different from any other commodity crop. It’s about how you’re growing it.
I’d hate to think of anyone not eating chocolate because they think it’s bad for the environment. It’s also hard because you can’t ask the consumer to research every chocolate bar out there and find out which ones are contributing to deforestation. It’s actually not hard to find the ones contributing to reforestation because there aren’t a lot of them.
But it’s hard to ask consumers to do that kind of research on every product they consume.
Yeah, it’s not their responsibility. Companies should be able to get it together and put a good product on the market that does a lot of good things for the world. But it is a shame for anyone to not eat dark chocolate because of that.
What we’ve found is the farmer incentives are there. When we started, we had no idea how much flavor was in the cocoa bean in Madagascar. We had no idea how that was connected and directly responsible for the need to plant shade trees with the cocoa. So as we’ve reforested a lot of land, we’ve brought back a lot of biodiversity that otherwise would be lost to the planet.
Be curious!
- Support sustainable chocolate producers
- Read more about what’s happening on cocoa farms in West Africa
- Watch Bitter Chocolate, an episode of Netflix’s “Rotten” series, to learn more about the history of the cocoa farming industry
- Read more about agriculture and sustainable farming in our archives
Photo via Unsplash
